Mihai, in Romania employers redirect a part of the employee’s salaries into an account (at Casa Nationala de Pensii). According to your work history and the sum of money you have accumulated into that account, when you retire you will receive a certain monthly payment.

I believe you can still arrange for this to happen as a freelancer, but you have to be registered as a PFA (Persoana Fizica Autorizata) with Registrul Comertului and pay all the required taxes.

There is also the option to make a contract with a company that provides private retirement funds (most if not all banks offer such a service in Romania).

A final option is for you to simply save money in a private bank account and use them at your own discretion when you stop working or whenever you want.

P.S. I wrote all the important legal terms and official names in Romanian. I’m sorry if that caused confusion to people of other nationalities, but I tried to help Mihai as much as possible, while still helping the rest understand some of what I said.

- When you are employed, the company itself deducts from your salary an amount to pay for your insurance, social pension etc., So when you retire, those things “come home” with you. You did not recognize that you actually paid for it each month because the company itself does it.

- When you are a freelancer, you can still pay for these on your own. There are kind of social pension fund and private pension fund, or insurance. Just take a look around the insurance agencies, many package for you to choose. If you choose to be a freelancer then I recommend you do this. Because no one knows what may come tomorrow. Things are different when we are getting older, especially the health.

Whatever you choose, I think that living a life is not just about earning and spending. It’s about smartly saving and investing, too. It would be more and more helpful when we get older by times…

In the USA self employment tax ranges from 13%-28% of your total income per year depending on your state. Some of that goes towards social security which I assume I would get at that age (60 I believe) but from the looks of things that will never happen. We are better off burying the cash in the back yard.

In the U.S. the government basically doubles your tax bill then claims to “invest” half of it for you because you are presumably incapable of making your own plans for the future. In reality (if you are younger), what is likely to happen is that money gets used up sooner than you retire, so as Tyler said:

StevenGliebe said
In the U.S. the government basically doubles your tax bill then claims to “invest” half of it for you because you are presumably incapable of making your own plans for the future. In reality (if you are younger), what is likely to happen is that money gets used up sooner than you retire, so as Tyler said:

In other words, we take advantage of private retirement investments with whatever we have left after the government forces us to pay the self-employment tax (social security and medicare).

I think the system was a great idea when it was created. It was not designed to keep up with the times, inflation, and the massive influx of baby boomers who are currently crippling Social Security. My generation will most likely never see a dime from the system regardless of giving them a third of our money every year.

By all means you should pay your taxes, not doing so is a horrible idea. If you can afford to invest in some other form of retirement I would say its a much better idea than relying on uncle sam.

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